Copyright transactions: sports as a money printing machine

media copyright transactions: Making a “money-printing” machine from sport business

The first Formula One (F1) race will be officially held in 2020 in Hanoi’s My Dinh sports complex as the second race in Southeast Asia, following the Singapore GP. With this, Vietnam becomes the 22th country in the world and the third in Southeast Asia to host the F1.

While Hanoi would like to host the race for 10 years at the least, setting up a successful race will be difficult without support from Vingroup.

While so many countries are fleeing from hosting F1 races, Vietnam sees an opportunity to enter the world of professional sports, opening the doors for lucrative marketing deals.

Meanwhile, in football, Vietnam has a generation of gold players with extensive international experience.

Pham Ngoc Vien, former general secretary of the Vietnam Football Federation (VFF) and former general director of Viet Nam Professional Football Joint Stock Company (VPF), the organiser of several professional football tournaments in Vietnam, said that these factors make the football transfer market very promising. Vien estimated that this market is worth about VND100 billion ($4.35 million).

League licensing is getting hotter than ever. According to Vien, in developed countries, broadcasters will have to pay for television rights to football tournaments. Until now, the television rights for Vietnamese leagues have been traded through barter. That is, the VPF holds the TV rights over the leagues, which it trades with live broadcasters for advertising VPF and the league’s sponsors.

However, the fraught negotiations through which Vietnam bought the rights to the 2018 World Cup gave the public a glimpse into the workings of sports economics. Accordingly, after two years of negotiations, Vietnam was the last country in the world to purchase the broadcasting rights for $14-15 million, with Vingroup contributing $5 million and the remaining covered by VTV and Viettel.

The misery over copyrights was repeated at the Asian Games 2018 (Asiad 2018) due to the high prices ($3-4 million). VTV announced that it will not be able to purchase the television rights. However, VTC Digital Television (a member of VOV) decided to buy the license for all events, with support from Vingroup and Viettel.

A marked change since previous years, VTV was not the only broadcasting right holder for the ASEAN Football Federation (AFF) Cup 2018 in Vietnam as Next Media Solutions JSC also purchased the media license for non-terrestrial television transmission platforms. Next Media's move is the first instance of competitive broadcasting between channels in Vietnam.

A related move opening new horizons is Lavifood JSC’s programme “Live with Football – AFF Suzuki Cup 2018," a television programme accompanying the Suzuki Cup. While Lavifood is a predominantly agricultural corporation, this move shows how the private sector could generate profit from professional sports.

A fertile land for investors

Even as the world sports market is slowing down after a period of rapid development, the main revenues from events, media, and sponsorship have still been growing well, leading to the market expansion of international tournaments. This is a great opportunity for Vietnam which is home to millions of enthusiastic fans as well as businesses looking to promote their brand.

According to Pierre-Paul Vander Sande, general director of Canal Plus Advertising, global sponsorship has been rising in value every year, growing from $37 billion in 2007 to $62.8 billion in 2017. This shows that brands are spending more on sports marketing.

In the finals of the UEFA Champions League 2017 between Real Madrid and Juventus, Gum Gum Sport, which helps rights holders and sponsors measure the real media value of sports, has measured 517 million social interactions, billions of displays, more than 1,000 minutes of total time that logos of brands appeared during the match, with a media value of $164 million. Based on Gum Gum Sport’s calculations, two of the major sponsors, Adidas and Emirates, received $113 million in media revenue through the sole sponsorship of the logo on the two teams' clothing.

"Sports marketing can not only increase brand awareness, but can help connect, inspire loyalty, and convey an important message to the audience," said Pierre-Paul.

Meanwhile, Koon Kee Phua, managing director of Aquarius Vietnam, cited exciting figures about the global media sports licensing market. Specifically, the value of sports media rights in 2018 is $49.5 billion and is expected to reach $54 billion by 2021. The 10 sports worth the highest global media attention belonged to soccer ($18.8 billion), followed by rugby ($7.2 billion), and basketball ($4.3 billion).

According to Koon Kee Phua, there the major consumer behaviour trend that businesses must understand is the rise of new devices to watch sports, such as smart phones and tablets. Through these devices users can comment, share, and livestream to experience, connect, and become a part of the tournament, and also help brands to appear across multiple devices, multiple broadcast channels, and increase consumer reach.

Pierre-Paul Vander Sande thinks that there are three main points that businesses should identify to reach and interact with consumers effectively. First, brands need to be aware that sports are not just male-dominated hobbies, women today are also very interested in sports – and not only football: basketball, tennis, martial arts, and racing also carry significant potential. Lastly, not only the tournaments and the matches themselves, but news, commentary, and game shows related to sports also attract a large audience.

A game changer is the rise of social television with Twitter and Facebook both promoting such features. Twitter affirmed that sports is one of the main segments the firm plans to develop live broadcasts for. Meanwhile, YouTube Live has also reached an agreement to live report the UEFA Champions League final as a partner of BT Sport.

The sponsorship and use of the brand's logo is based not on emotions or competition, but on in-depth research identifying the most suitable placement of each product and brand, says Pierre-Paul.

In addition, brands should not be too focused on spending money on sponsoring, but also need to launch promotional activities to capture enthusiasts. Many brands spend hundreds of millions of dollars on sponsorship without any follow-up activities, which is a gigantic waste of resources.